Throughout the world, countries are struggling with an acute labor shortage that shows no sign of abating. In the United States, a smaller workforce will be the key economic challenge of the foreseeable future, according to the U.S. Chamber of Commerce. The numbers are daunting: Even if every unemployed worker today were to fill an open job in their respective industry, the organization says, there would still be millions of unfilled positions.

But what if businesses redefined the labor pool itself? Doing so would mean looking beyond the ranks of the statistically employed and unemployed. Instead, businesses would tap into a less obvious but large group of people who are not participating in the formally recognized labor market. Many of these people would like to work but have been marginalized from the workforce for a variety of systemic or discriminatory reasons.

This includes people from less-advantaged populations; individuals with a criminal record; people with physical, mental health, or developmental challenges; those with a history of substance abuse; and people with low educational attainment or without traditional qualifications.

A study by Harvard Business School (HBS) estimates there are more than 27 million of these “hidden workers” in the United States, and similar proportions across the UK and Germany. “The sheer magnitude of this population reveals the potential impact that their substantial re-absorption into the workforce would have,” the study says.

Many businesses have reached out to engage these populations through their corporate social responsibility (CSR) efforts. Such measures might include changing degree/educational attainment requirements for a small segment of jobs. Or businesses might hire two or three people with a physical or mental disability, or a criminal record, or who belong to an underrepresented population in the local community.

But often, these are ad hoc measures that, while admirable, tend to fizzle out. Even if they do have some success, they may fail to grow or expand. As the HBR study points out, such isolated CSR efforts can “inherently reinforce the myth that hiring hidden workers is an act of charity or corporate citizenship, rather than a source of competitive advantage.”

By taking a more purposeful approach with their hiring programs and other CSR-driven initiatives, organizations can transform random acts of corporate social responsibility into long-lasting, far-reaching, repeatable programs. These programs would benefit marginalized workers, the communities they live in, and the business itself.

Such initiatives would need to address the needs of both the community and the business. They should involve agencies that deeply understand the specific needs of the demographic being hired. Additionally, they should provide wraparound services that go beyond the job. Vitally, these programs need to use data and technology to identify community needs, track the effects of initiatives and encourage uptake in other parts of the business. In other words, it’s not just about doing—it’s about doing with purpose and a goal in mind.

“There is a need, says Eric Eng, a college admission expert and the founder and CEO of AdmissionSight, “for companies to shift from piecemeal initiatives to systemic and strategic approaches that can truly impact underserved communities and build a stronger labor market.”

By taking a more purposeful approach with their hiring programs and other CSR-driven initiatives, organizations can transform random acts of corporate social responsibility into long-lasting, far-reaching, repeatable programs. These programs would benefit marginalized workers, the communities they live in, and the business itself.

From isolated acts to full-fledged efforts

There are as many wrong ways to pursue a CSR hiring initiative as there are right ways. Often, these efforts are started by a passionate employee whose enthusiasm is a key part of what drives the program. But with that dependency, the program is apt to languish should the employee leave or lose interest.

Initiatives also fail if their benefits—whether to the business or the community—go unrecognized. This can be due to a lack of rigor in measuring results or a failure to adequately match program elements to community or demographic needs.

For instance, a study by workforce researcher The Burning Glass Institute found that simply dropping degree requirements doesn’t significantly affect the hiring of people from diverse groups. The act of applying for a job, the organization says, is contingent not just on whether the individual has the required education credentials but also on whether they could imagine themselves working for a particular company or in a specific sector. This finding reinforces the importance of—beyond removing candidate qualifications—actively encouraging applicants who may never have considered themselves as potential employees.

A company that has fully embraced socially conscious hiring is MOD Pizza, a fast-casual pizza brand founded by a husband-and-wife team (former owners of Seattle Coffee Company, later acquired by Starbucks). Their vision: building a business with a positive social impact.

Soon after opening, MOD Pizza embraced what’s known as impact hiring, including people with backgrounds of incarceration, homelessness, drug addiction, and intellectual and physical disabilities. It worked with local and national organizations to learn what these individuals needed to thrive on the job, from skill-building to financial assistance during a crisis. It then partnered with various nonprofits to encourage candidates to apply.

Today, MOD Pizza credits its rapid growth largely to its hiring method. The business today has more than 2,500 employees, over 550 locations in the United States and Canada, and revenues of US$398 million. Ninety-nine percent of company-owned MOD stores have hired people with employment barriers, according to Dayna Eberhardt, chief people officer at the company, and these hiring practices have led to a more engaged and equitable workforce. These workers “have a higher sense of belonging, a faster rate of promotion, and a higher retention rate,” she says.

Building a socially conscious hiring program

MOD Pizza offers several best practices for creating a socially conscious hiring method that benefits both marginalized workers and the business. Some of these core elements include the following:

1. Match efforts to the needs of the local community

Businesses need to understand the specific barriers preventing people in the community from attaining stable employment. They can get these insights by mapping the company’s locations with external data sources that reveal challenges affecting nearby neighborhoods, such as a lack of public transportation, low graduation rates, poor access to healthcare, or limited housing affordability.

Similarly, businesses can map the geographic location of where employees and job candidates tend to live to identify “applicant deserts”—areas in the community where the company has not historically hired, despite their proximity to their operations. Knowing this, businesses can increase their outreach and visibility in these areas.

Romanita Matta-Barrera, Chief Workforce Officer for greater:SATX, an economic development partnership in San Antonio, Texas, is leading efforts to address the gap between available jobs and community members who could fill them—56% of whom are Hispanic.

“There are jobs available, and often employers wonder where the people are and, at the same time, we see a lot of individuals who have been systematically looking for jobs and have not had access,” she says. “So, we’ve taken a very serious, deep dive into how we can address this to meet not only the needs of our growing employers but to also ensure that our community and its members are being maximized.”

The organization has worked with Accenture Federal Services, which has embarked on a program to recruit individuals with little to no IT experience from an area of the city with a high level of poverty and a low level of educational attainment. Accenture partnered with several workforce agency partners to identify potential employees and provide them with basic skills training. They also offered wraparound services to address issues like transportation and childcare.

Training is run similarly to an apprenticeship program, with candidates given three to six months of skill-building, which often leads to full employment, she says. Accenture also targeted a summer high school internship program in the same region to engage the youth population.

As AdmissionSight’s Eng notes, “addressing systemic poverty and adverse childhood experiences requires a multifaceted approach.” It’s a way of thinking, he says, that “involves creating pathways to quality education and vocational training, ensuring that these are accessible to all individuals.”

2. Match efforts to business needs

The actions companies take to address community barriers should ideally reflect what the company produces, the services it provides, and what employees are passionate about. This ensures not only that CSR initiatives are meaningful to the community but that they also resonate with the company’s core mission and values.

Enter MOD Pizza, whose industry faces particularly acute hiring challenges. According to the National Restaurant Association, 79% of restaurant operators report difficulty hiring, and 62% are understaffed. This is amid a monthly labor turnover in the hospitality and food service sector at 5.4%, which is twice the national average.

Meanwhile, more than 600,000 individuals are released from prison each year in the United States, and 60% of those with federal convictions are jobless. Yet multiple case studies have shown this population of workers to exhibit high employee loyalty. MOD Pizza’s matchup of business and community needs is a win for both employer and employee.

In San Antonio, meanwhile, Ernst & Young (EY) has become more innovative in its hiring process by tapping into the local pool of two-year college students. This matches EY’s specific business needs because—as Matta-Barrera points out—even if applicants had a four-year college degree, they would have to be retrained for EY’s system anyway. As part of the process, EY revamped its onboarding process and engaged its employee resource groups to ensure these new hires were not overwhelmed by entering a corporate environment.

The actions companies take to address community barriers should ideally reflect what the company produces, the services it provides, and what employees are passionate about.

3. Go beyond the job to provide wraparound services

Businesses soon discover that socially conscious hiring extends far beyond offering a job. It also means providing additional supports that are specific to the demographic. For instance, one manufacturer that wanted to increase local hiring learned that many potential applicants did not have reliable transportation to the jobsite. The company worked with employees to become qualified ride-share drivers and provided them with a company car to give these new hires a ride to work.

In another case, when an automotive supplier began hiring people who were homeless to work at the company, it realized it needed to provide these workers with new shoes.

Jeffrey Korzenik, economist and author of Untapped Talent: How Second Chance Hiring Works for Your Business and the Community, emphasizes the need for combining quality candidates with cost-effective support systems. In a recent article, he says the most advanced practitioners of what he calls the “second-chance model” of hiring provide social workers, “navigators,” psychologists, or life coaches to these employees. For example, he says, U.S. Rubber Recycling employs a psychiatric rehabilitation counselor, and Nehemiah Manufacturing uses social workers instead of HR professionals.

One manufacturer that wanted to increase local hiring learned that many potential applicants did not have reliable transportation to the jobsite. The company worked with employees to become qualified ride-share drivers and provided them with a company car to give these new hires a ride to work.

Businesses should work with local agencies, nonprofits, and community organizations that are already supporting the hiring demographic. These organizations understand these individuals’ most pressing issues and the most effective interventions. As the HBR report says, groups like these have credibility with the workers and understand their needs. “Partnering with such groups helps companies develop, launch, and refine a program to make hidden workers integral to their talent management programs,” the report says.

When Toyotetsu Texas, a supplier to Toyota Motor Manufacturing Texas’s San Antonio plant, began hiring individuals with intellectual and physical disabilities, it partnered with the Texas Workforce Commission’s Vocational Rehabilitation Services agency, which provides wraparound services to these individuals. The company also created internal job coaches and mentors, and provided plant tours and hands-on experiences to help potential employees determine whether the environment would be a good fit for them.

“These are individuals who have the competencies to work well in this type of environment with the right internal processes such as mentorship coaching and other accommodations,” Matta-Barrera says.

4. Measure success and scale

Lastly—but also essentially—businesses need to understand the effect their programs are having in order to sustain and grow these efforts. Too often, the program becomes a line item with a cost assigned to it and no measure of the value it’s providing.

Businesses should collect data such as the number of individuals hired through these programs, their retention rates, and their progression within the company, and pull it together into a dashboard for quick and easy access.

Data collection is something MOD Pizza has been intentional about doing. For all of 2022 and into early 2023, employees with justice involvement were promoted at a rate 1.2% greater than the company baseline, says Robin Hamm, MOD Pizza’s vice president of social impact. Some of these employees hold leadership positions in the company’s stores and support centers. Some also serve as general managers, district managers, and regional directors. And in an industry with staggering attrition rates, these employees were also retained at a rate 6% greater than the company baseline.

Dashboards can also help businesses share the details of successful CSR programs across different locations within the company so they can be replicated without reinventing the wheel—or making costly mistakes. For instance, if one business unit has established a program to donate used laptops to underserved students, other divisions could see what makes this program work well and set up similar programs in their communities.

Businesses should collect data like the number of individuals hired through these programs, their retention rates, and their progression within the company, and pull it together into a dashboard for quick and easy access.

These dashboards could work as a sort of recommendation engine if they’re populated with pre-vetted agencies and organizations to work with, or actions proven to support communities, based on the barriers to employment they help overcome, including transportation and mentorship programs, charitable giving, and educational and employment opportunity programs.

Beyond the business itself, organizations should also measure how their efforts are affecting the community overall. Even if it’s not a direct result, are rates of homelessness, graduation rates, Internet access, or poverty levels rising or falling?

For instance, the Burning Glass Institute conducted a project with Starbucks examining the effect of the company’s tuition assistance program on employees’ career trajectories after they left the company. What they learned: These employees often went on to increasingly successful careers that—over time—would strengthen the overall community by fueling economic growth and improving the standard of living for their own families.

A new way of hiring

When it comes to the labor shortage, the problem is not that there aren’t enough people—it’s that employers are not using the potential of the whole community. This is forcing organizations to rethink how they design their hiring programs so they can be more employable to more people.

Going even further, they need to discover how they can help people coming from these communities who face challenges many employers cannot even imagine.

By investing in efforts to aid marginalized workers, businesses can make use of formerly untapped labor resources, and by doing so, support their own growth, boost economic development in the community and, ultimately, elevate their brand reputation in the eyes of consumers, employees, and investors.